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Senate inquiry submissions urge tax reform, mitigation

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Insurers and brokers are urging insurance taxes be overhauled and governments ramp up disaster mitigation efforts in the wake of last summer’s devastating and costly bushfires.

The Senate Finance and Public Administration References Committee’s Inquiry into “Lessons to be learned in relation to the Australian bushfire season 2019-20" received 117 submissions from organisations and individuals.

The National Insurance Brokers Association (NIBA) has again urged that unequal state funding models for emergency services be scrapped because they add to the number of Australians who are uninsured or underinsured.

NIBA describes current levies as “inequitable and needlessly opaque” and is calling for the abolition of insurance-based taxes such as NSW’s Emergency Services Levy and Tasmania’s Fire Service Levy.

“Inefficient and poorly designed tax systems should not be stacked on top of each other for the sole purpose of collecting revenue at the expense of the public good,” NIBA says in its submission.

IAG’s submission says mitigation is key going forward as climate change is “already well underway and is considered by many to be the greatest risk currently facing humanity.”

Policies must reduce Australia’s carbon emissions in line with Paris Agreement targets, IAG says. “Governments need to ensure a changing climate is accounted for when creating a strategy to mitigate, adapt and improve community resilience to natural perils.”

Geoscience Australia has called for a national archive open to the insurance industry and researchers, policymakers and the public that would allow stakeholders to better model future risk and impact, using data of past events.

Geoscience says bushfire data is too often duplicated and inaccessible, with no mandate for anyone to curate and preserve data for future events.

The Salvation Army’s submission focuses on affordability and, like NIBA, it recommends scrapping insurance stamp duty.

It wants governments and the insurance industry to work together to incentivise hazard-resilient building and urges regulatory bodies to monitor any insurance premium increases as a result of the 2019-20 bushfire season and floods to ensure that these are “fair and justified.”

Natural disasters should be included in standard home and contents insurance policies, the charity says, and regulators should ensure cost recovery from the 2019-20 bushfire season does “not result in a disproportionate and unjustifiable increase in insurance premiums.”

The Consumer Action Law Centre submission argues that allowing insurers to pay a cash settlement amount based on what it would cost the insurer to repair or rebuild are unfair contract terms.

“We expect insurers to be proactively removing unfair terms from their policies,” it says. “It would be preferable if unfair contract terms were unlawful, with civil penalties applying for any breach.”

It makes 13 recommendations, including establishing an independent inquiry into affordability, standardising key definitions in insurance contracts such as ‘fire’, establishing a permanent insurance price monitor and increasing funding for disputes against insurance companies.

University of NSW Professor Jeremy Moss also made a submission, again urging a “Medicare-style” system to address the premium affordability problem in bushfire-prone areas.

The Insurance Council of Australia has said other solutions would be more fair and effective.